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PATNA HIGH COURT
S.B.Sinha and Aftab Alam JJ.
Sone Vanaspati
Versus
State Of Bihar
Civil Writ Jurisdiction Case No. 11529 of 1993 ;
Decided On : JANUARY 10, 1994
INDUSTRIAL POLICY - SALES TAX EXEMPTION - NOTIFICATION - ESTOPPEL - DOCTRINE OF PROMISSORY ESTOPPEL - DOCTRINE OF ESTOPPEL BY CONDUCT - INDUSTRIAL INCENTIVE POLICY - BIHAR FINANCE ACT, 1981 - SECTION 7(3).
Fact of the Case:
The petitioner, an existing company incorporated under the Indian Companies Act, 1956, and carrying on business in Vanaspati at Barun in the district of Aurangabad, challenged the demand notice and assessment proceeding served upon it by the State of Bihar for non-payment of Sales Tax. The petitioner claimed exemption from payment of Sales Tax based on the Industrial Policy, 1990, and the Industrial Incentives Policy, 1993, adopted by the State Government, which granted benefits of Sales-tax to small and medium scale industries.
Finding of the Court:
The Court held that the petitioner was not entitled to the exemption from payment of Sales Tax as the State Government was not bound to give effect to its policy decision despite non-issuance of a notification under Section 7(3) of the Bihar Finance Act, 1981, as the policy decision itself required the issuance of a separate notification and fixation of terms and conditions for grant of exemption.
Issues: 1. Whether the State Government was required to issue a notification under Section 7(3) of the Bihar Finance Act, 1981, in view of the Industrial Incentive Policy decision dated 10.6.1993. 2. Whether the State Government was bound to give effect to its policy decision despite non-issuance of such a notification in view of the doctrine of estoppel by conduct.
Ratio Decidendi: 1. The Court held that the Industrial Incentive Policy decision dated 10.6.1993 itself required the issuance of a separate notification under Section 7(3) of the Bihar Finance Act, 1981, and fixation of terms and conditions for grant of exemption. Therefore, the petitioner was not entitled to the exemption from payment of Sales Tax in the absence of such a notification. 2. The Court held that the doctrine of promissory estoppel could not be invoked against the State Government in this case as the petitioner had not altered its position pursuant to any promise made by the State Government and the essential elements of estoppel by conduct were not present.
Final Decision: The Court dismissed the petitioner's application, holding that there was no merit in either of the contentions raised by the petitioner.
S.B.Sinha, J.
1. This application is directed against an order as contained in Annexures 6-A and 6-C to the writ application whereby and where under a demand notice had been served upon the petitioner and the assessment proceeding has been directed to be continued.
2. Bereft of all unnecessary details the fact of the matter is as follows:
The petitioner is an existing company, incorporated under the Indian Companies Act, 1956, and carrying on business in Vanaspati at Barun in the district of Aurangabad, whereas its factory is situate.
3. The State adopted a resolution on 21st February, 1990 known as Industrial Policy, 1990 with a view to accelerate growth of Industry in the State of Bihar and by reason thereof a new scheme was inter alia introduced granting benefits of Sales-tax to the small and medium scale industries. The petitioner-Company was incorporated on 31st March, 1990. A term loan of Rs. 5.30 lakhs was sanctioned to the petitioner. A Factory for manufacturing vanaspati was set up at Barun by the petitioner which is a medium scale industry and its trial production started from 21st May, 1993.
4. The State of Bihar again adopted a policy decision on 10th June, 1993 known as Industrial Incentives Policy, 1993. A copy of the said resolution is contained in Annexure-3 to the writ application. In terms of the said policy decision the Industries which have commenced or may commence production in between the period from 1.4.1993 to 31st March, 1998 are to get the benefit of exemption from payment of Sales-Tax for a period of ten years from the date of production.
5. The petitioner allegedly exercised its option in terms of the aforementioned policy decision, which is contained in Annexure-2 to the writ application. According to the petitioner despite the said fact the authorities of the Commercial Taxes Department did not allow the petitioner to obtain the benefit of exemption from payment of Sales Tax. The petitioner on 3rd August, 1993 wrote a letter to the respondent No. 3 bringing to his notice the aforementioned fact. In answer to the said letter, the respondent No. 4 by his letter dated 7th September, 1993 as contained in Annexure-5 to the writ application informed the Assistant Commissioner Commercial Taxes. Aurangabad (Respondent No. 5) that the notification in question under the Bihar Finance Act, 1981 was expected to be issued shortly.
6. According to the petitioner despite the same it has been threatened that a proceeding for imposing of penalty under Bihar Finance Act, 1981 would be taken and pursuant thereto five notices as contained in Annexures 6 to 6/D had been issued. Mr. Gopal Subramaniam, the learned Counsel appearing on behalf of the petitioner has raised two contentions in support of this application. The learned Counsel firstly submitted that in view of the fact that the policy decision dated 10.6.1993 itself has been published in a Gazette, it was not necessary to issue a formal notification in terms of Sub-sec. (3) of Section 7 of the Bihar Finance Act.
7. The learned Counsel in support of his contention has relied upon a Full Bench decision of this Court in Tara Steel industries V/s. Assistant Commissioner reported in 1986 BBCJ 201.
8. It was next contended that in any event, the policy decision shall operate despite non-publication of the notification under Sec. 7(3) of the Bihar Finance Act as the State is bound thereby and it is stopped and precluded from demanding the Sale Tax in view of its own policy decision. The learned Counsel in support of the aforementioned contentions has relied upon a decision of the Supreme Court of India Vasant Kumar Radhakisan Vora V/s. The Board of Trustees of the Port of Bombay .
9. Mr. S. Rafat Alam, the learned Standing Counsel appearing on behalf of the State, on the other hand, submitted that in terms of the Policy decision dated 10.6.1993 itself (Annexure-3) a notification under Sec. 7(3) of the Bihar Finance Act is required to be published and the ter
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